BlackRock cuts BYJU’s valuation to $1 bn

In a huge setback to India's biggest online ed-tech company BYJU's, U.S.-based global asset manager BlackRock has reportedly cut the value of its stake in India's foremost ed-tech major to $1 billion from $8.4 billion in May 2023.

When contacted, BYJU's spokesperson declined to comment on the development. The current drop in the valuation is a staggering 95% for a company that was valued at $22 billion in early 2022.

Blackrock, which manages over $10 trillion in assets globally, had first entered BYJU’s roster of marquee investors at a $12-billion valuation in CY20.

In November 2023, Prosus also slashed BYJU's valuation to less than $3 billion, around 86% lower than $22 billion valuation in the previous year.

The Netherlands-based tech investor holds a 9.6% stake in BYJU's parent Think & Learn Pvt Ltd. Before that in June 2023, Prosus had cut the value of its stake in BYJU's to $493 million, valuing the ed-tech startup at $5 billion.

The Dutch investor pumped $536 million into BYJU's since 2018. In April 2021, it invested $153 million in the firm.

But in the past two years, the homegrown ed-tech company has been battling a huge crash crunch and a string of controversies including violations of FEMA (Foreign Exchange Management Act) rules.

The troubled unicorn in November 2023 had received show-cause notices under the FEMA Act, 1999, based on the complaint filed by the Directorate of Enforcement (ED). It allegedly made significant foreign remittances outside India and investments abroad, contravening the FEMA 1999 provisions and causing a loss of revenue to the government. The ED notice said the company had indulged in over ₹9,000 crore worth of violations.

To founder BYJU's Raveendran’s dismay, the ED had conducted searches at the premises of the ed-tech firm and the residence of in April 2023 and seized documents pertaining to all investments received by the company as well as documents pertaining to its overseas investments.

Notably, BYJU's had gone on an acquisition spree over the past few years. It shelled out $2.5 billion on acquisitions that included Aakash Educational Services for nearly $1 billion, U.S.-based Epic, kids' coding platform Tynker, professional education firm Great Learning and exam prep platform Toppr.

In early 2023, BYJU's statutory auditor Deloitte Haskins & Sells had also quit citing a long delay in the ed-tech startup's financial statements for the year ended March 31, 2022. Deloitte, which was appointed as BYJU's auditor till 2025, said it had not been able to commence the audit as of date. Along with Deloitte, BYJU's investor board members from Prosus and Peak XV had also resigned.

The company's revenue surged 2.3 times in FY22, while its EBITDA (earnings before interest, taxes, depreciation, and amortisation-based) loss of the core business had declined to ₹2,253 crore in FY22. In FY21, BYJU's loss on a standalone basis, which included its K-12 vertical, stood at ₹2,702.14 crore compared to a net profit of ₹7.39 crore during FY20.

In terms of churning, in September 2023, BYJU's had conducted restructuring, which impacted 3,000-3,500 jobs. A year before in October 2022, it had announced the trimming of 2,500 job roles or 5% of its 50,000 workforce.